Gaza militants on Thursday fired an anti-tank missile at an Israeli school bus, critically injuring a teenager, prompting the army to pound the Strip, killing three and wounding more than 30.
After the missile slammed into the bus, the Palestinians lobbed at least 45 mortar rounds into southern Israel, hitting a house, and the army responded by staging multiple raids across the enclave, one of which hit an ambulance, Palestinian medics said.
As the rockets flew over the border, Israel's Iron Dome short-range missile defence system intercepted a projectile heading for the southern port city of Ashkelon, in what was the first time the system has ever been successfully used in a combat situation.
The bus attack was the first time an anti-tank missile had hit a civilian target in Israel, prompting Israeli defence minister Ehud Barak to order the army "to act swiftly" in response.
"An anti-tank missile was fired directly at the bus," police spokesman Micky Rosenfeld told AFP shortly after the attack on the school bus which was passing in front of kibbutz Nahal Oz, just across the border from Gaza City's eastern flank.
A spokesman for the Israeli medical services said a 16-year-old boy was critically wounded in the attack, while the bus driver sustained only light injuries.
Television footage showed the yellow bus with the back end badly damaged and the windscreen blown out, as a small teddy bear lay on the ground among shards of glass and pools of blood.
The bus had just finished dropping off dozens of schoolchildren.
"Defence minister Ehud Barak ordered the IDF (army) to act swiftly with all the necessary means and to respond to the attack on the bus," a statement from his office said, noting that Barak "considers Hamas to be responsible for all incidents coming from Gaza."
Immediately after the bus was hit, militants in Gaza fired at least seven mortar rounds at the area, complicating efforts to evacuate the teenager and the bus driver, an AFP correspondent said.
By early evening, the army said at least 45 mortar rounds and rockets had slammed into southern Israel, one of which scored a direct hit on a house.
But one rocket aimed at Ashkelon was shot down by the multi-million-dollar Iron Dome system, which first went into operation on March 27, in what was the first time a short-range interceptor has been deployed anywhere.
As the rocket flew through the air, the interceptor missile streaked up into the sky to hit it, their two trails converging in an explosion, an AFP correspondent said.
A military source confirmed to AFP it was the first time Iron Dome had hit a rocket in actual combat.
Following the surge in violence, the Israeli military hit back immediately, shelling an area in eastern Gaza City and killing a 50-year-old man and wounding another five people, including a small child.
Air strikes hit two Hamas positions in and around Gaza city, and other raids hit targets in the southern cities of Rafah and Khan Yunis, killing another two people and wounding tens more, eight of whom were injured when shell fragments hit an ambulance, Palestinian medical sources said.
In total, some 34 people were wounded across the Gaza Strip.
A spokeswoman for the military confirmed troops had launched multiple attacks on targets in Gaza, saying it "fired at places from which mortars are fired at Israel."
Over the past month, dozens of rockets have hit southern Israel, some reaching cities as far as 40 kilometres (25 miles) away, prompting a series of retaliatory air strikes and raids.
So far, Israel's response has been muted.
Many believe the Jewish state is reluctant to be dragged into another bloody war with Hamas akin to Operation Cast Lead, the 22-day war which began at the end of 2008 and left more than 1,400 people dead.
But Israeli Prime Minister Benjamin Netanyahu, who is currently en route to Prague after talks in Berlin with German Chancellor Angela Merkel, said he would deal with the surge in violence when he returned to Israel on Friday.
"I'm not going to manage things from Berlin airport... when I get to Israel tomorrow, we shall, of course, continue the necessary actions to ensure the safety of the citizens of Israel," he said in comments broadcast on Israel's Channel 10 television.